Wild markets set stage for winner-take-all trading competition

Market volatility can be a heyday for active traders and other short-term investors, which is why the kind of extreme market turbulence seen over the past few weeks could be setting the stage for a different kind of trading competition.

Jaime Rogozinski, founder of the Reddit forum WallStreetBets, is looking past the COVID-19 pandemic to October, when he plans to hold a three-day, winner-take-all, options-trading competition in Austin, Texas.

The fast-spreading coronavirus has added some hurdles to the plans, relating to potential prize money and whether there will be a live audience, but Rogozinski is convinced he has struck gold with his brainchild idea.

On the question of whether people will want to pay to watch — either in person or via a pay-per-view subscription — a dozen traders hustle to outmatch each over three trading days, he believes there is a willing audience for almost anything.

“There was a League of Legends tournament last year that attracted more than 100 million viewers, which is more than the audience of the Super Bowl,” Rogozinski said. “If I ask my wife to sit in front of a Bloomberg terminal she will be equally not entertained. She’s not the target audience, but videos on YouTube of people losing money or making money get over a million hits and that’s when viewers already know the results.”

The self-published author of “WallStreetBets: How Boomers made the world’s biggest casino for Millennials,” Rogozinski is gauging the potential appeal of an options-trading competition by the traffic on his Reddit community forum, that has exploded in popularity in recent weeks.

Launched in 2012, the r/wallstreetbets forum for high-risk trading has more than a million subscribers, more than five million monthly visitors, and has counted more than 200 million page views so far this month, according to Rogozinski.

Most of those recently enamored with the high-risk world of options trading are younger investors that have become skeptical of Wall Street and advisers promoting long-term investing strategies.

The competition will be restricted to whatever can be traded during normal trading hours on the Chicago Board of Options Exchange.

Unlike individual stocks or bonds, options are contracts that give a buyer the right, but not the obligation, to buy or sell a security or other asset at a preset price within a preset period.

Rogozinski said he is restricted by regulators from announcing the total prize money for his competition but said it will be "six or seven figures."

Details are still being worked out, but Rogozinski said contestants will likely need about $50,000 worth of investing capital in order to qualify and compete. He is seeking 12 contestants who are willing to trade their own money for three consecutive days.

He plans to run the event like televised poker tournaments, where analysts commentate on strategies and educate viewers on the action taking place.

“There’s clearly an audience for people who want to watch people make a lot of money and lose a lot of money,” he said. “Someone who understands the market will understand this isn’t a long-term trading strategy, they’re just trying to beat the other guys for three days.”